Who can contribute
An individual may make contributions to party committees, subject to limits.
An individual who is under 18 years old may make contributions to party committees, subject to limits, if:
- The decision to contribute is made knowingly and voluntarily by the minor;
- The funds, goods or services contributed are owned or controlled by the minor, proceeds from a trust for which he or she is a beneficiary or funds withdrawn by the minor from a financial account opened and maintained in his or her name; and
- The contribution is not made using funds given to the minor as a gift for the purpose of making the contribution, and is not in any way controlled by another individual.
A partnership may make contributions aggregating $10,000 per calendar year to the state, district and local party committees of a particular state party (combined limit) and up to $35,500 to a national party committee. A contribution from a partnership is attributed to the partnership and to each partner’s share of the firm’s profits or by agreement of the partners.
Contributions made by individual partners
Each partner make make contributions aggregating up to $10,000 per calendar year to the state, district and local party committees, in a particular state and up to $35,500 to a national party committee. Contributions made by individual partners from their own funds do not count against the partnership’s limit.
Limited liability companies
In some cases, limited liability companies (LLCs) are treated as partnerships. For the purposes of contribution limitations and prohibitions, an LLC is treated as a partnership if:
- It does not have publicly traded shares; and
- It has chosen to file, under IRS rules, as a partnership; or
- It has made no choice under IRS rules, as to whether it is a corporation or a partnership.
Attribution among partners
A portion of the partnership contribution must be attributed to each contributing partner. If all partners within the organization are contributing, the partnership may attribute the contribution according to each partner’s share of the firm’s profits.
However, if the partnership attributes a contribution on another basis agreed to by the partners, the following rules must be observed:
- Only the profits of the partners to whom the contribution is attributed are reduced (or losses increased); and
- The profits (or losses) of only the contributing partners are reduced (or losses increased) in proportion to the contribution attributed to each of them.
- The portion attributed to each partner, when aggregated with other contributions from that person, must not exceed the individual partner’s contribution limit.
See also “Who can’t contribute.”
Who can’t contribute
A political committee is prohibited from knowingly accepting a contribution that violates the prohibitions on contributions.
Corporations and labor organizations
The Federal Election Campaign Act prohibits corporations and labor organizations from making contributions in connection with federal elections. (A corporation or labor organization may pay the expenses of setting up, administering and soliciting contributions for its own political committee, called a separate segregated fund (SSF or PAC). A party committee may accept contributions from a corporate or labor PAC registered with the FEC.) This prohibition applies to all types of incorporated organizations, except political committees that incorporate only for liability purposes. National banks and federally chartered corporations, such as federal savings and loan associations, are prohibited from making contributions in connection with state and local as well as federal elections.
A corporation or labor organization may not reimburse individuals who make contributions to a political committee, for example, through a bonus, expense account or other direct or indirect compensation.
Extensions of credit
An extension of credit to a political committee by an incorporated commercial vendor is a prohibited contribution unless the credit is extended in the ordinary course of business with terms substantially similar to those given to nonpolitical clients of similar risk. A prohibited contribution can also result if a corporate vendor extends credit for longer than the normal practice in the vendor’s business or if the vendor fails to make a commercially reasonable effort to collect payment on the debt.
Forgiveness or settlement of a debt owed by a political committee must comply with the debt settlement procedures.
If an incorporated commercial vendor sells goods or services to a committee at a price below the usual and normal charge, a prohibited contribution results in the amount of the discount. (There is, however, an exception for discounts offered by vendors of food and beverage.) A reduced price is not considered a prohibited discount; however, if it is offered by the vendor in the ordinary course of business at the same amount charged to nonpolitical clients.
Compensation for services
If a corporation or labor organization pays for services rendered to a committee, a prohibited contribution results.
A corporation or labor organization may, however, provide free legal and accounting services to a party committee.
Partnerships with corporate members
Because contributions from corporations are prohibited, a partnership with corporate members may not attribute any portion of a contribution to the corporate partners. A partnership comprised solely of corporate partners may not make any contributions.
Federal government contractors
Federal government contractors are prohibited from making contributions or expenditures in connection with federal elections. For example, a contribution from a partnership with a government contract would be prohibited. As another example, a contribution from the personal or business funds of an individual or a sole proprietor with a government contract would be prohibited. However, employees, individual stockholders and officers of federal contractors may make contributions or expenditures from their personal assets. Also, the spouse of an individual who is a federal contractor may make a personal contribution or expenditure in his or her own name.
Partnerships with federal government contracts
A partnership which is negotiating a contract with the federal government or which has not completed performance of such a contract is prohibited from making contributions. However, an individual partner in such a firm may make contributions from personal funds (rather than from funds drawn on the partnership’s account).
Also, an individual partner who is a federal contractor in his or her own right may not make contributions using any funds (business or personal) under his control.
Foreign nationals are prohibited from making contributions, donations or expenditures, either directly or through any other person, in connection with any election—federal, state or local. In addition, foreign nationals may not donate to any party committee building fund, or fund electioneering communications or independent expenditures.
The Act prohibits knowingly soliciting, accepting or receiving contributions or donations from foreign nationals. In this context, “knowingly” means that a person:
- Has actual knowledge that the funds solicited, accepted or received are from a foreign national;
- Is aware of facts that would lead a reasonable person to conclude that there is a substantial probability that the funds solicited, accepted or received are likely to be from a foreign national; or
Is aware of facts that would lead a reasonable person to inquire whether the source of the funds solicited, accepted or received is a foreign national, but the person failed to conduct a reasonable inquiry.
It is also unlawful to knowingly provide substantial assistance to foreign nationals making contributions or donations in connection with any U.S. election. “Substantial assistance” refers to active involvement in the solicitation, making, receipt or acceptance of a foreign national contribution or donation with the intent of completing the transaction successfully. This prohibition includes, but is not limited to, individuals who act as conduits or intermediaries.
Definition of foreign national
The following entities are considered foreign nationals and are therefore subject to the prohibition: foreign governments; foreign political parties; foreign corporations; foreign associations; foreign partnerships; and individuals with foreign citizenship unless they have “green cards” indicating they have been lawfully admitted for permanent residence.
Safe harbor provision
In some cases, a committee may have questions regarding whether or not a contribution is from a foreign national. For example, the contributor may have a foreign address or bank. In this case, a committee has made reasonable assurances that the individual is not a foreign national if the committee obtains current and valid U.S. passport papers for the contributor.
The safe harbor cannot be relied on if the committee has actual knowledge the contribution is from a foreign national.
PACs of domestic subsidiaries of foreign corporations
A political party committee may accept contributions from the PAC (separate segregated fund) of a U.S. corporation that is a subsidiary of a foreign corporation as long as:
- The foreign parent does not finance the PAC’s activities through the subsidiary; and
- No individual foreign national participates in the operation of the PAC (including the selection of persons to run the PAC) or makes any decisions regarding PAC contributions or expenditures.
Corporate donations for nonfederal activity
A domestic subsidiary of a foreign corporation (or a domestic corporation owned by foreign nationals) may donate funds in connection with state or local elections (including nonfederal accounts of political parties) so long as the funds do not come from the foreign parent or owner, and individual foreign nationals are not involved in any way in the making of donations to nonfederal candidates or committees. Please note that many states place additional restrictions on donations made to nonfederal candidates and committees.
Partnerships with foreign national members
Because contributions from foreign nationals are prohibited, a partnership may not attribute any portion of a contribution to a partner who is a foreign national.
Contributions in the name of another
Contributions made by one person in the name of another person are prohibited, and no one may assist someone in making such a contribution.